The Oklahoma Energy Index expanded at the fastest pace in more than five years thanks to significant gains in oil and natural gas prices and an increase in statewide drilling activity.

A 40 percent increase in the monthly average for natural gas prices and a 13 percent increase in crude oil prices has renewed optimism in Oklahoma’s oilfield, and the improved economic environment for the state’s defining industry is expected to carry the Oklahoma economy forward through 2017.

“The improvement in the Index over the last three months supports the feeling of a possible recovery in the energy sector. Oil inventories remain high, but short-term equipment and labor constraints provide a window for inventories to decline,” said Chris Mostek, senior vice president of energy lending for Bank SNB. “While early, 2017 is off to a good start for the industry and the Oklahoma recovery.”

Improving commodity prices and increased drilling activity helped push the Energy Index upward to 167.2 using data collected in December, a 3 percent increase from the previous month’s reading of 162.3 and the largest monthly gain in the index since 2012.

“Industry activity contracted through much of 2016 before forming a bottom in the middle of the year and slowly improving through the second half of the year,” said Dr. Russell Evans, executive director of the Steven C. Agee Economic Research and Policy Institute. “The year ended roughly where it started with industry activity expected to continue expansion through 2017.”

Evans said oil and gas employment, while continuing to decline to close 2016, is expected to trace out a bottom in the first half of 2017. As increased oil and natural gas prices spur activity in Oklahoma’s oilfields, the improving economic conditions will put Oklahomans back to work and provide much-needed relief to the local economy.

The Energy Index is a comprehensive measure of the state’s oil and natural gas production economy established to track industry growth rates and cycles in one of the country’s most active and vibrant energy-producing states. The OEI is a joint project of the Oklahoma Independent Petroleum Association (OIPA), Bank SNB and the Steven C. Agee Economic Research and Policy Institute.